'Imagine a reverse section 106 arrangement'

Published by 24publishing for 24dash.com in Housing and also in Central Government, Communities, Local Government

Creative invention in housing is widespread, says Chris Wood, partner at consultancy Altair, as providers seek new solutions to old problems.

Here, he highlights ways providers are meeting the challenge and adapting to radically different mechanisms to deliver affordable housing.

We live in difficult times. Rising unemployment and at its worst (the north east) a stagnant housing market and at its best (London) a struggling housing market. The policy response needs to be dramatic.

A massive welfare reform programme; a new market based structure for the national health service; and a radically different market mechanism for “affordable housing”. We all know that the Welfare State that we grew up with has gone forever.

In the face of this change has the affordable housing sector been too cautious? No of course it hasn’t. Our common cause is our tough commitment to improving the supply and quality of housing for those unable to access the UK’s tenure of choice – home ownership. When the going get’s tough, we all know what the tough do.

Working with local authority, housing association and private sector housing providers over the last 12 months it is clear to me that the span of the debate has moved as the context in which we operate has shifted.

Creative invention is widespread as we all seek new solutions to old problems.

Willmott Dixon, Birmingham City Council and West Mercia homes recently announced their JV to deliver circa 1000 homes (funded from institutional investors) for market renting in Birmingham on redundant local authority land with deferred land payments, it has been talked about for a long time, but now it’s happening.

Swan New Homes have announced a new build programme of 4000 homes over the next five years. No big deal, except 50% of this is outright market sale – for cross subsidy of the affordable programme. We have seen it before, but not on this scale. Imagine a reverse section 106 arrangement, where affordable housing developers are required to develop a proportion of outright market sale properties in order to support their affordable housing development.

Home Group has a Joint venture company with Gateshead Council and Galliford Try, to deliver 2400 homes over 15-20 years on 19 council owned sites. Gateshead, sits in one of the bleakest housing market areas in the country. Development is high risk and so necessity dictates the risk is shared.

Barking and Dagenham have struck a deal with Long Harbour to secure institutional investment to build social housing – 477 homes on a leasing arrangement let at 50-80% of market rent – funded from the rental income. At the end of the lease the properties are handed over to B&D.